Why and when you need an estate planning/elder law attorney in California

Top reasons why you may need an estate planning or elder law attorney:

1. To keep more of your assets and money for your family than for the government/attorneys
2. To have peace of mind that your family and all you have worked for is protected
3. To avoid the state’s plan for the passing of your estate (probate) because it is complex, difficult, expensive, and time-consuming, and you want to make sure you don’t put your family through it
4. To acknowledge that your needs will change as you age, and it takes critical planning to ensure that you and your family are cared for as you grow older
5. Because the government (through Medicare/Medi-Cal/Medicaid) will not be sufficient for your long-term care, and you know that an attorney can help you to evaluate your options to make sure you are protected

Top reasons when you may need an estate planning or elder law attorney:

1. Your estate becomes worth $150,000 or more (not including debt)
2. Your loved one has been diagnosed with dementia or Alzheimer’s
3. You are worried that you do not have a plan in place for your estate and family after you’re gone – everyone needs a plan, regardless of age, estate size, or family composition
4. You are concerned about your or your loved one’s ability to cope with rising costs, continue to pay bills, or provide for ongoing medical care

Do you have any of these concerns?

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Not married? Why you need estate planning, too

If you’re not married, you may think that you don’t need an estate plan. Not true! Generally, you need to get yourself an estate plan once you buy a house or have a child – or both! When you own real estate, your estate will (particularly in California) go above the $150,000 exemption for probate. This means that, once you own property in California, your estate will go through probate. Probate is what you want to avoid like it’s a disease: it will take 18-24 months to settle your estate and also take about 10% of your gross estate in fees – and that fee is not taking any indebtedness into consideration. And that’s just to start.

Once you buy a house, therefore, you need an estate plan. In addition, once you have a child, you need to have an estate plan because you will need to decide who is going to take care of your child should you be unable to. This can only be done in your will. In addition, if you don’t have handy who is responsible for your child if you become injured or incapacitated, then the police could TAKE your children if something happens to you. Just think: you’re out to a nice dinner, the babysitter’s with little Suzy, and you get into an accident on the way home. The police won’t be leaving little Suzy with the 17 year-old babysitter, and if you don’t have clearly posted who is to be responsible for Suzy, then the police could TAKE your child. You don’t want that to happen.

Both of these circumstances – buying a house and having a child – necessitate an estate plan, regardless of whether you are married or not. In fact, it becomes more important to have an estate plan when you’re single because you don’t have the potential benefit of joint tenancy.

What are you waiting for?

Nominating a guardian: important estate planning for California parents

Say you’ve gone out to dinner with your friends or your spouse or your new beau. The kids are at home with the babysitter, someone you trust but who’s just a teenager. On your way home, you take your eyes off the road for a split second and you get into a car accident. When you’re taken to the hospital, unconscious, the police are going to go to your house to check on your children. When there’s nothing in writing saying who should take your children in the event you are incapacitated (I recommend posting this on the refrigerator), then the police can take your children – because you can be assured that they will not leave your children with a young babysitter. The Nomination of Guardian can prevent this.

Your Nomination of Guardian states who you want to care for your children if you are not able to. It can be temporary, such as after an accident, or permanent, such as if you pass away. It is critical to have so that you do not have a gap of time in which your children are taken to the police station and sent out to foster homes until the situation resolves itself.

In the case of a divorce or other child custody case, it takes on a new significance because now there are two households involved. BOTH parents should have a custody and visitation agreement readily accessible to them and their child caregivers, and the agreement should be as specific as possible – even if the couple is agreeing and cooperating with each other – to break the “tie” in the event of a dispute. If the agreement/order says, “visitation as the parents agree,” then the police will not enforce that vague order. With a nomination of guardian, if the couple has already chosen one, both parties have to (1) understand that the other parent will be the guardian if something happens to them (unless there are issues of substance abuse, domestic violence, or some other issue that limits custody/parenting time for one parent), and (2) that the person the couple picked when they were a couple might not continue to be appropriate. Because the couple is now separated, there is a significantly lesser chance that they will die together, but that doesn’t mean a nomination of guardian is less important. Each parent needs to decide who THEY think will be the most appropriate person, and create a document memorializing that.

Estate planning in California: Why your living trust isn’t enough

The centerpiece of any good estate plan is your living trust.  This is the document that allows your estate to pass without going through probate, paying 8-10% of your gross estate in fees and expenses, and forcing your family through 2-3 (or 5-6) years of court appearances, lawyers and judges making decisions about your property.  Proper estate planning can also help you to minimize or eliminate estate tax.  Having no estate plan or having just a will won’t do this.

But proper estate planning includes other consideration and critical documents as well, and should not be overlooked in your planning.

1. FUNDING your trust. All of your assets – yes, all of them – should be titled in the name of your trust. Hopefully, your estate planning attorney transferred your real property (house) into the trust, but generally, you are responsible for transferring the rest of your assets, such as bank accounts, stocks, and life insurance.
2. Pour-Over will.  You still need a will, even if you have a living trust, because anything that is not in your trust will need to go into probate.  There are a couple important things to know about your pour-over will.  First, it includes your nomination of guardian, so this in itself is a reason why it’s so important.  Second, while you will be funding your trust with all of your property (and thus will not likely need a will), things can happen where you are not able to put your property in your trust, such as when you are the subject of a wrongful death suit or if you don’t have possession yet of the property before you pass away.  Third and finally, the will is called a “pour-over” because pours overanything probated into your living trust.
3. Powers of attorney.  You need powers of attorney, one for your property/assets and one for health care. Powers of attorney go into effect when you are still alive but you are incapacitated due to illness or accident.  These determine who will be making medical and care decisions on your behalf (and paying your bills) when you are unable.  These are key because, if you wait until you are already incapacitated to get one, then your family must go through the court process of getting a conservatorship, which is lengthy and expensive.
4. Assignment/Distribution of Personal Property.  These documents first put all of your personal property (your furniture, cars, pets and other personal belongings) into your trust, and then list how they will be distributed upon your death.  These are important because often the biggest arguments after you are gone are about the smallest things, like the jewelry and china.  Don’t leave your family fighting because you didn’t leave instruction.
5. Certificate of Trust.  This is the four-page summary of your trust that you will use to transfer your property into your trust.  Instead of having to take the whole binder, or even the whole 30-page trust document into the bank – and share the detail of the contents – you use the four-page summary that maintains your privacy and makes it much easier to copy and share with your account holders.

In addition to these documents, I consider it part of my job to help you ensure that ALL of your affairs are in order.  This includes your pre-need funeral arrangements, ensuring you have enough life insurance, that you have long-term care insurance, and are doing what you need to do now to have the retirement that you want.  These additional services are not provided by me and I don’t get anything for referring someone to you.  But I have spent lots of time getting to know the best professionals in each of their respective businesses, because I want to refer you to only the best to be able to take care of all of your needs.

If your estate planning professional is not providing all of these services – and more (follow up, ongoing communications, updates on law, etc.) – then perhaps you should reconsider who you are talking to, or at least ask some questions.  Your family is worth it.

Don’t overlook these important estate planning concerns in California divorce

When you get a divorce in California (and everywhere else!), there are important estate planning considerations to take into account.  In fact, these are so critical that you could end up leaving your estate to your ex spouse (ouch!), having your ex make important medical decisions for you, or – if you act hastily and without the proper information – you could get into trouble with the court system.

During Divorce:  First, when you file for divorce in California, regardless of whether it’s Alameda County, Contra Costa County, or any other California county, once the other party is served, both of you become restrained from doing certain things.  One of these restraining order involves your will or trust, and prohibits you from making any changes to your will or trust once you’ve filed for divorce and served the other party.  One of the others prohibits either of you from changing or cancelling any insurance, such as life, health, auto/property, etc., or changing the beneficiaries on any insurance or other account where a beneficiary is named.  Do not make the mistake of cancelling your ex’s health insurance or changing your will after you have filed for divorce!

You may make these changes with permission from the other party or with a court order, and you may want to seek this.  Particularly if you have separate property, the last thing you want is for your ex to get it all if something happens to you. You may also want to get permission to change the beneficiary of your life insurance into a trust for your children, but you need permission for both of these actions.

One of the changes that you should make as soon as you can, and there is no court prohibition on this, is your powers of attorney.  For both health and finances, you want to make sure you designate someone other than your ex who will make decisions for you and manage your affairs should you become incapacitated.  If you’re lying in a hospital bed unconscious, do you really want your ex deciding whether to get surgery or wait to see if the medication improves your condition?

After Divorce:  Once your divorce is final, you want to make sure you change your will or trust, your powers of attorney (if you’ve not done so already), the beneficiaries on your life insurance, retirement and other accounts, and make sure you have enough life insurance for your children and long-term care insurance to care for yourself as you get older.

Need more help?  Click here for our FREE Divorce e-Course.

Estate planning if you’re unmarried or divorced in California

If you’re not married, or divorced, you may think that you don’t need an estate plan. Not true! Generally, you need to get yourself an estate plan once you buy a house or have a child – or both! When you own real estate, your estate will (particularly in California) go above the $150,000 exemption for probate. This means that, once you own property in California, your estate will go through probate. Probate is what you want to avoid like it’s a disease: it will take 18-24 months to settle your estate and also take about 10% of your gross estate in fees – and that fee is not taking any indebtedness into consideration. And that’s just to start.

So once you buy a house, you need an estate plan. In addition, once you have a child, you need to have an estate plan because you will need to decide who is going to take care of your child should you be unable to. This can only be done in your will. In addition, if you don’t have handy who is responsible for your child if you become injured or incapacitated, then the police could TAKE your children if something happens to you. Just think: you’re out to a nice dinner, the babysitter’s with little Suzy, and you get into an accident on the way home. The police won’t be leaving little Suzy with the 17 year-old babysitter, and if you don’t have clearly posted who is to be responsible for Suzy, then the police could TAKE your child. You don’t want that to happen.

Both of these circumstances – buying a house and having a child – necessitate an estate plan, regardless of whether you are married or not. In fact, it becomes more important to have an estate plan when you’re single because you don’t have the potential benefit of joint tenancy.

What are you waiting for?

Changing beneficiaries during/after California divorce

While you are married, generally you name your spouse as the beneficiary on your life insurance, 401K, pension, etc. Once you get divorced, however, you are going to want to change those beneficiaries. This may sound simple, but it is extremely common for someone to forget and their ex-spouse ends up with their assets upon their death.

Why is that? I can only guess. First, as I have discussed before, during the time your case is in the court system (after you have filed your Petition but before you have your Judgment), you MAY NOT change any of your beneficiaries or your will or trust without consent from the other party. You cannot even sever a joint tenancy without notifying your spouse. But AFTER, when the case is over, you are not only free to do so, but you really need to.

I think some people forget, or once they have their Judgment, they want to put all of the hassle behind them. Don’t do this! You took the effort to get divorced – don’t forget to complete the process and change the beneficiaries on your accounts!

A friend of mine came to me recently because the spouse of a colleague of his had passed away. The only asset this person left was a life insurance policy that named a girlfriend of his from nearly twenty years before. She’s likely to lose her home because her husband, in twenty years, never changed his life insurance policy beneficiary. This is the worst that can happen, so don’t let it happen to you.

Your pending California divorce case: What to do with your will/trust or estate plan

I have been thinking more about my posting about your will, and I felt it needed more to make it complete. Specifically, IF you have a divorce case currently, what can you do NOW to protect yourself and your children? Divorce cases can last for years. Yes, unfortunately this is true, so we have to hope for the best (a speedy and as-painless-as-possible case) and plan for the worst (an endless case). So if you have a case and the ATROs (automatic restraining orders in California divorce) prevent you from changing your will (or estate plan), here are some things you can do.

First, take advantage of the ability to sever joint tenancy (JT). The ATROs allow you to sever joint tenancy with simply NOTICE to the other party. Sever this JT and should something happen to you, you have the ability to give your half of any real property (a house, for example) to someone other than your estranged spouse.

Second, have a conversation. If you have a lawyer, your lawyer might be telling you never to talk to your estranged spouse. I disagree with this family law case philosophy because (as one of our local judges used to say) YOU are in the best position to come to a resolution of your case. If you stop talking to each other, then hostility can grow and you may be likely to fight more. Now, this approach works well for the lawyer, who gets to funnel ALL of your issues at $450 an hour! It’s better on you, your relationship, your pocketbook, and your case if you’re able to talk to each other. Talk about changing your will so each of you can make an estate plan that provides for your own property to go to the individuals you choose instead of each other.

Third, if you can’t have an informal conversation, bring it up in a formal setting. Whether it’s a meeting with your lawyers, a court conference, or if you add it to the issues to be raised at a hearing, make time to discuss these issues so they’re at least out in the open.

Estate planning and California divorce: a checklist to avoid disaster

Often, after the time, expense, and emotional upheaval of California divorce (as well as moving, adjusting to life as a single person/parent, dealing with tightening finances…etc. etc.), the last thing on anyone’s mind is estate planning.  Yes, it’s one of the things on the list of things to do…later, when you have time.  When you’re emotionally ready to think about it.  Right?  Well, the reality is that just post-divorce IS the best time to do estate planning.  Why?

1. Because it’s on your mind since you’re working to get the rest of your life in order.
2. It’s critical to get your ex-spouse off of your accounts and as your beneficiary.  You really don’t want him/her inheriting from you, do you?
3. It’s really not that hard, and in fact rather than being draining or difficult, can not only be empowering but help you to really feel like your life has restarted.

Here are the key estate planning items you need to take care of post-divorce (and note you probably can’t do these during your divorce due to the ATROs):

1. Create a new (or initial) living trust and will to protect your assets and your beneficiaries.
2. Cancel any old estate plans.
3. Sign a new power of attorney for asset management.
4. Sign a new health care advance directive power of attorney.
5. Designate the guardian for your children should you pass away.
6. Get new life insurance to meet your (and your children’s) needs.
7. Update the beneficiary on your life insurance, retirement accounts (401Ks, IRAs, etc.) and other payable on death (POD) accounts.
8. Make sure your assets are retitled in your name only.
9. Let people know you’re no longer divorced, like banks, health care providers, and other trusted advisors so no one gives out personal or confidential information inadvertently.
10. Talk to your parents about estate planning, the importance, and how it will help everyone if they create an estate plan (it helps them to leave a legacy and saves you the additional intense difficulty of probate).

Doing these simple tasks will help you to feel stronger, in control, and empowered to take on life’s next challenge.  What are you waiting for? Make an online appointment by clicking here.

Where there’s a will, there’s a way…(more on California estate planning in divorce)

Here, I want to ask (and answer!) the question, do you need a will (and when and why). The answer, which might be surprising to you, is absolutely YES! With very few exceptions, everyone needs a will.

In my business and in this blog, I have worked hard to educate others on the importance of an estate plan centered around a living trust. A living trust avoids probate, transfers your property easily upon your death, and allows you to avoid fees and taxes (among many other reasons that you can see in my estate planning blog). But your estate plan has other components, and one of these is your will. In an estate plan, your will is called a “pour-over” will because it’s intended to ‘catch’ any property that you have left outside your estate.

Now, you may be asking, what kind of estate plan is it if you leave something out of it?! Well, sometimes we forget (despite the repeated reminders from our friendly estate planning attorney), and sometimes there’s just not time. If you acquire property and pass away before you are able to complete the transfer to your trust, then you want that will to ensure that your property transfers appropriately to your heirs through the probate process.

But in the context of family law, when and why is a will important? Let’s look at this issue in two contexts because they’re very different. First, let’s look at the time when you are going through your divorce or other family law case (where you are restricted from changing/updating your will) and once the action (case) is completed (where you NEED to update it).

The Automatic Temporary Restraining Orders (ATROs) in the Family Law Summons provide,

“Creating a nonprobate transfer or modifying a nonprobate transfer in a manner that affects the disposition of property subject to the transfer, without the written consent of the other party or an order of the court. Before revocation of a nonprobate transfer can take effect or a right of survivorship to property can be eliminated, notice of the change must be filed and served on the other party.”

What? This basically means that you cannot change your will or living trust during the pendency of your action without written consent of the other party or a court order. Note that this includes severing a joint tenancy on a property (which does not require consent but does require advance written notice). So when you are in the middle of a divorce and you pass away, that house you have in joint tenancy goes automatically to your ex. Ouch. But if you don’t know about these restrictions, then you could get into trouble with the court, which is a bad idea. Also, remember this if you’re thinking of filing for divorce.

Once your case is over, however, you really DO need to update your will. In fact, you most likely need a full estate plan that includes a living trust. Hopefully I have convinced you of that by now. If you don’t, then your out-of-date document WILL control the disposition of your assets. To look at recent examples, Brittany Murphy did not update her will when she got married. Heath Ledger never updated his will after his daughter was born (and that caused all kinds of trouble).

Don’t make their mistakes, and always make sure your estate plan is updated to take into account a marriage, divorce, birth, death, or acquisition of property.